According to audit firm KPMG CEO Trevor Hoole, the company should have stopped working for the Gupta companies sooner than it did.
Following the Public Protector’s investigation into their dealings, the company ended its 15-year relationship with the Gupta family. Hoole said the severing of ties was a long time coming and “KPMG should have resigned earlier”.
“While the last audit opinions for the group were signed for the 28 February 2015 year end, it is now clear that based on publicly-available information, KPMG should have resigned earlier than March 2016 and should have stopped working for the Gupta companies sooner than we did,” Hoole said in a statement on Friday.
“In my judgement, we were too slow to recognise the wider public interest related to these matters, given the existing socio-political environment in South Africa. We fully understand that our client acceptance and continuance procedures must be improved to take account of this fact,” he added.
Accordingly, the auditing firm announced the suspension of its lead audit engagement partner. It also relieved two other partners of their board and executive positions. Though the company will not be lured into revealing the identity of the partners who were penalized, it was confirmed that a review of the work the company did for Gupta-linked companies is underway.
In addition, the global consultancy said that the review would be “independently” led by KPMG International (KPMGI).
“Accordingly‚ the review team is now being led by an experienced senior partner from the KPMG network‚ reporting directly to KPMGI’s global vice chair of quality risk and regulatory‚ as well as to the South African board‚” he said.
Recently leaked e-mails revealed that payments made to the Gupta’s Linkway Trading had been used to cover the costs of the lavish family wedding held at the Sun City resort in 2013. Notably, four KPMG partners had also attended the wedding as guests.
Hoole described this as a mistake, saying they shouldn’t have attended.
“Mistakes have been made and painful lessons learnt. We commit to take every action necessary to apply these learnings to strengthen the way we work‚ and help restore the public trust we have earned over more than a century of commitment to the highest professional and ethical standards and dedicated service to South African businesses‚ the capital market and the wider public interest‚” he said.
“(We) accept that the partners should not have attended this wedding,” said Hoole.
Hoole said the company understands the criticism surrounding the attendance of KPMG partners at the Gupta wedding and accepted that they shouldn’t have attended.